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Commissioner Of Cent... v. Amar Bitumen And All...
Factual and Procedural Background
The Revenue filed civil appeals before the Supreme Court challenging Final Order No. A/141-144/WZB/2005.CI dated 17-2-2005 of the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench, Mumbai (“the Tribunal”). The Tribunal had allowed the assessee’s appeals, set aside the Commissioner of Central Excise’s order that (a) demanded Rs 93,98,607 in duty for the period 1-4-1993 to 2-7-1996, (b) imposed a penalty of Rs 40 lakh under Rule 173-Q of the Central Excise Rules, 1944, (c) demanded Rs 54,01,636 under Section 11-AC for 28-9-1996 to 31-3-1998, and (d) levied personal penalties on the Managing Director, Chief Executive and Authorised Signatory. The Commissioner had classified the product “Bitufelt Type III Grade I” under Chapter Heading 68.07 of the Central Excise Tariff Act, 1985, rejecting the assessee’s claim for classification under Heading 59.09 read with Exemption Notifications 53/65-CE and 92/94-CE. The Tribunal, following an earlier coordinate-bench decision, held the goods classifiable under Heading 59.09 and granted exemption. The Revenue appealed; the assessee, though served, was not represented before the Supreme Court.
Legal Issues Presented
- Whether “Bitufelt Type III Grade I” should be classified under Chapter Heading 68.07 (as contended by the Revenue) or under Chapter Heading 59.09 (as contended by the assessee).
- Whether the process of converting straight-grade bitumen into blown-grade bitumen constitutes “manufacture” for the purpose of excise duty.
Arguments of the Parties
The opinion does not contain a detailed account of the parties' legal arguments.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| CCE v. Bitumen Products (India) (1999) 107 ELT 58 (CEGAT) | “Bituminised Hessian based felt” falls under Heading 59.09, not 68.07. | Used as the primary precedent for classifying the impugned product under Heading 59.09. The Tribunal decision had attained finality as Revenue filed no appeal. |
| Union of India v. Kaumudini Narayan Dalal (2001) 10 SCC 231 | Revenue cannot accept a ruling in one case and dispute it in another identical case; doctrine of consistency/finality. | Invoked to bar Revenue from contesting classification after not appealing the earlier Bitumen Products decision. |
| CCE v. Telco (2003) 11 SCC 193 | Same principle of consistency where earlier orders were not appealed. | Cited to reinforce that Revenue cannot “pick and choose.” |
| Birla Corporation Ltd. v. CCE (2005) 6 SCC 95 | Reiterated that the Revenue, having accepted earlier orders, cannot take a contrary stand later. | Quoted to demonstrate why inconsistent positions would create legal uncertainty. |
| Jayaswals Neco Ltd. v. CCE (2007) 13 SCC 807 | Continuation of the above consistency principle. | Added weight to the Court’s refusal to allow the Revenue to litigate the same issue again. |
| CCE v. Tikitar Industries (2000) 118 ELT 468 (CEGAT) | Conversion of straight-grade to blown-grade bitumen does not amount to “manufacture.” | Relied upon by the Tribunal and subsequently affirmed by the Supreme Court to resolve Issue 2 in favour of the assessee. |
| National Tar Products v. CCE (2001) 135 ELT 1388 (CEGAT) | Same rule as Tikitar Industries regarding “manufacture.” | Supported the Tribunal’s finding that the process is not manufacture. |
| CCE & Customs v. Tikatar Industries (2010) 13 SCC 73 | Supreme Court approval of Tikitar Industries and National Tar Products decisions. | Cited to show that Issue 2 is settled by the Supreme Court against the Revenue. |
| Pepsico India Holdings Ltd. (2001) 130 ELT 193 / 42 RLT 800 (CEGAT) | Referenced in Birla Corpn.; illustrates acceptance of an earlier decision by Revenue. | Used indirectly (through quotation in Birla Corpn.) to illustrate the inconsistency problem. |
Court's Reasoning and Analysis
1. Classification Issue (Heading 68.07 vs 59.09): The Court observed that the Tribunal’s earlier decision in CCE v. Bitumen Products (India) on the identical question had achieved finality because the Revenue chose not to appeal. Citing a line of Supreme Court authority (Kaumudini Narayan Dalal, Telco, Birla Corpn., Jayaswals Neco), the Court reiterated that the Revenue cannot selectively accept a favourable ruling in one case and dispute it in another. Consequently, consistency mandated that the product be classified under Heading 59.09 and enjoy the benefit of the relevant exemption notifications.
2. Manufacture Issue (Blown-grade Bitumen): On whether blowing straight-grade bitumen amounts to manufacture, the Tribunal had followed its earlier rulings in Tikitar Industries and National Tar Products. The Supreme Court noted that these Tribunal decisions were subsequently affirmed in CCE & Customs v. Tikatar Industries. Therefore, the issue was squarely covered against the Revenue, and no further analysis was necessary.
3. Overall Conclusion: Both issues had been conclusively settled by precedents that bound the Court. As such, the Court found no merit in the Revenue’s appeals.
Holding and Implications
APPEALS DISMISSED.
The immediate effect is that “Bitufelt Type III Grade I” remains classified under Heading 59.09, entitling the assessee to exemption from excise duty for the disputed periods; associated duty demands and penalties stand annulled. The decision reinforces the doctrine that the Revenue must maintain consistency once it accepts an unappealed decision; no new legal principle was created, but existing jurisprudence on finality and non-manufacture of blown bitumen was reaffirmed.
Order
1. These appeals are directed against Final Order No. A/141-144/WZB/2005.CI dated 17-2-2005 in Appeal No. E/55-58/00-MUM passed by the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench at Mumbai (for short “the Tribunal”) wherein and whereby the Tribunal while accepting the appeals filed by the respondent assessees, set aside the order passed by the Commissioner of Central Excise confirming the duty demand of Rs. 93,98,607 against the assessee and imposing a penalty of Rs. 40 lakhs in terms of Rule 173-Q of the Central Excise Rules, 1944 (for short “the Rules”) for the period from 1-4-1993 to 2-7-1996 and Rs. 54,01,636 under Section 11-AC of the Act for the period from 28-9-1996 to 31-3-1998 and penalties of Rs. 2 lakhs, Rs. 1 lakh and Rs. 50,000 on the Managing Director, Chief Executive and Authorised Signatory respectively of the assessee. The Commissioner confirmed the demand by classifying the product “Bitufelt Type III Grade I” under Chapter Heading 68.07 of the Schedule to the Central Excise and Tariff Act, 1985 (for short “the Tariff Act”), and rejecting the claim of the assessee for classification under Chapter Heading 59.09 read with Notifications Nos. 53/65-CE and 92/94-CE dated 20-3-1965 and 25-4-1994 respectively.
2. The two points to be decided in the present appeals are: (i) whether the article under consideration is to be classified under Chapter Heading 68.07, as contended by the Revenue or under Chapter Heading 59.09, as contended by the assessee; and (ii) whether the process of making blown grade bitumen out of straight grade bitumen amounts to manufacture.
3. Heard the learned counsel appearing for the Revenue. The respondent assessee is not represented before us in spite of service.
4. The Tribunal relying upon an earlier decision of another Bench of the Tribunal in CCE v. Bitumen Products (India) (1999) 107 ELT 58 (Cegat), held that “bituminised Hessian based felt” is covered under Chapter Heading 59.09 as contended by the assessee and not under 68.07 as contended by the Revenue. Admittedly, no appeal was filed by the Revenue against the earlier decision of the Tribunal in Bitumen Products (India) (1999) 107 ELT 58 (Cegat) and the same has become final.
5. This Court in a catena of cases has consistently taken the view that if an earlier order is not appealed against by the Revenue and the same has attained finality, then it is not open to the Revenue to accept the judgment/order on the same question in the case of one assessee and question its correctness in the case of some other assessees. The Revenue cannot pick and choose. (See Union of India v. Kaumudini Narayan Dalal (2001) 10 SCC 231, CCE v. Telco (2003) 11 SCC 193, Birla Corpn. Ltd. v. CCE (2005) 6 SCC 95, Jayaswals Neco Ltd. v. CCE (2007) 13 SCC 807, etc.)
6. It was held in Birla Corpn. Ltd. (2005) 6 SCC 95, as under:
“5. In the instant case the same question arises for consideration and the facts are almost identical. We cannot permit the Revenue to take a different stand in this case. The earlier appeal involving identical issue was not pressed and was therefore, dismissed. The respondent having taken a conscious decision to accept the principles laid down in Pepsico India Holdings Ltd. (2001) 130 ELT 193, (2001) 42 RLT 800 (Cegat) cannot be permitted to take the opposite stand in this case. If we were to permit them to do so, the law will be in a state of confusion and will place the authorities as well as the assessees in a quandary.”
7. Accordingly, we affirm the finding recorded by the Tribunal to the effect that the article under consideration would be classifiable under Chapter Heading 59.09 and the assessee would be entitled to the exemption from payment of excise duty under the notifications in question.
8. The second point, as to whether the process of making blown grade bitumen out of straight grade bitumen amounts to manufacture, was decided by the Tribunal in favour of the assessee, relying upon the decisions of the Tribunal in CCE v. Tikitar Industries (2000) 118 ELT 468 (Cegat) and National Tar Products v. CCE (2001) 135 ELT 1388 (Cegat).
9. The aforesaid decisions based upon which the impugned judgment has been rendered by the Tribunal, have been confirmed by this Court in its order dated 2-8-2006 in CCE & Customs v. Tikatar Industries (2010) 13 SCC 73. In view of this, the second issue as well raised by the Revenue stands concluded.
10. For the foregoing reasons, we do not find any merit in the appeals and dismiss the same.
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